New York City-based Recruiter.com, a provider of outsourced recruitment services and software, has borrowed $2.3 million U.S. to fund its ongoing technological pivot.

The loan, from Montage Capital, carries a 13% interest rate, with interest-only payments required until July 2023.

With Recruiter.com’s shares trading this week under $0.70, less than 15% of their value after the company’s July 2021 IPO, equity financing was not an attractive option.

“The structure of this debt financing offered a strong alternative to immediate equity financing, especially during this particularly difficult environment for small issuers,” Recruiter.com chairman and CEO Evan Sohn said in a news release.

Recruiter.com plans to use the financing to “accelerate the automation of its on-demand recruiter service, to move forward with its new strategic plan and for general working capital purposes,” according to the announcement.

Recruiter.com, a staffing agency transitioning to a more tech-focused model with job boards, a recruiter-placement service and recruitment-platform subscriptions, enjoyed triple-digit revenue growth during the pandemic. While revenue growth decelerated over the past two quarters, it was still up 75% year on year in Q2 2022.

The company posted $7.1 million in revenue and a net loss of $1.2 million in Q2. In the company’s Q2 earnings call, Sohn said that gross adjusted margins had improved to almost 42% and that the company expected to reach positive monthly adjusted EBITDA before the end of this year.

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